FeedsMichigan Development Bank would help state spark economic efforts
Michigan Democrats are hoping to ‘bank’ on the success of business in the state.
Democrats in the Michigan Senate unveiled a proposal on Tuesday that would create a Michigan Development Bank, said State Sen. Ray Basham (D-Taylor). He said it would keep residents’ money in Michigan and put it to work to stimulate the economy and create jobs through increased business lending and protect consumers with reasonable interest rates on loans.
“The Michigan Development Bank would serve as an innovative way to revive our economy and pump some much-needed money back into our state,” said Basham, who is term-limited out of office this year.
“The advantage of running our own financial institution would help ensure our money stays in our state by providing loans to businesses to grow in Michigan and create good-paying jobs for our workers,” he added.
The Michigan Development Bank would be structured like a traditional financial institution, but it would operate differently, with an increased emphasis on economic development rather than profits, he said. The proposal will take money invested by Michigan residents and use it to reinvigorate the economy by offering small business loans to generate economic activity, help companies get off the ground and grow, and create jobs.
It would also offer low interest credit cards to assist struggling consumers with bills and purchases without charging excessive rates that perpetuate a cycle of debt, and allow consumers to roll over current credit card debt to a state credit card.
Low interest student loans to help Michigan families afford a higher education and limit the overwhelming debt they face following graduation would be a part of the package, too, he said, as would agricultural loans to continue to support one of Michigan’s most important industries and help farmers rebound from this economic crisis.
Senate Democrats propose establishing the Michigan Development Bank with an economic development bond that will have to be approved by the voters. The general rule is that for every $100 deposited, a bank can lend $900. A rough estimate is that with an initial capitalization of $150 million, the Michigan Development Bank could lend up to one billion dollars.
The Senate Democrats Michigan Development Bank proposal is patterned after the highly successful Bank of North Dakota, said Basham.
“Michigan has been hit hard by the nation’s economic downturn, with the unemployment rate at 14 percent and a projected state budget deficit of over $1.5 billion,” Basham said. “In this current recession, North Dakota has continued to add jobs and balance its budget, primarily because it keeps its money in North Dakota.
“North Dakota regularly puts between $50 and $60 million back into its general fund,” Basham added. “When you consider that North Dakota’s economy is ten times smaller than Michigan’s, a conservative estimate is that we could generate $500 million for our state’s general fund.”
